Public-private partnerships require broad support and proven methodologies that set them aside from other forms of government contracts. Because PPPs are long-term relationships that require extensive capital and risk-sharing, they are usually overlooked because of all of the risks and intricacies involved in ensuring their success.
However, with increasing support in Congress and several success stories that demonstrate their effectiveness internationally, the various components of public-private partnerships demonstrate why they should be considered as viable options for building and maintaining new infrastructure.
PPPs Help Governments Fund Services
In the past few decades, public-private partnerships have become more sought after in both the United States government and abroad.
With an ongoing need for capital and infrastructure, governments are becoming more open to working with private partners who can manage problems in a cost-effective and timely manner.
The PPP model is especially beneficial for government organizations that struggle with technological and social complexities that can best be managed by third party experts.
In 2015, Congress passed the Fixing America’s Surface Transportation (FAST) Act which authorized $305 billion towards long-term transportation spending for infrastructure planning and investment.
Some of the funding from the FAST Act was allocated to states to create PPPs that would assist in the design, implementation and oversight of highway projects.
Acknowledging and allocating funds to PPPs gives them more credibility and support for future projects. In the first three quarters of 2016, nine major public-private partnership deals were secured in the U.S. compared to only 5 PPP deals in 2015. Records also show that public-private partnerships are active in more than 20 states.
With the public’s demand for better infrastructure and the willingness of the private sector to fund these critical projects, PPPs will continue to grow and succeed as viable solutions for public sector problems.
PPPs Let the Experts Deliver Improvement and Innovation
As explained in an earlier blog post, no one PPP is the same. However, for all intents and purposes, the most extensive public-private partnership would be one in which the private partner finances, designs, builds, maintains and operates the project to which they have been assigned and paid for.
While not all PPPs incorporate all of these processes, the one similarity among all of the different types is that they require a need for a dedicated revenue stream.
PPPs tend to work through contracts, otherwise known as Service-Level Agreements (SLAs). Service-Level Agreements are formal agreements between service providers and clients that define the working relationship between groups.
Through SLAs and long-term contracts, third-party vendors are incentivized to achieve velocity in service and implement constant innovation and modernization techniques to their procedures.
By working with a government organization over a long period of time, the private partner wants to invest in skilled staff, training, maintenance and technology that will contribute to long-term success and stability for that agency while keeping costs and errors down.
In comparison to PPPs, other typical models that governments can choose from, with regard to system modernization, include Multi-vendor and Single vendor models.
Multi-vendor: a government agency hires multiple vendors who can meet specific requirements related to information technology enhancements and business processes
|Single vendor: a government agency hires a single vendor who can provide turn-key services related to IT updates and business processes|
While these models are viable options for technological improvements in organizations, they are only short-term solutions and do not take into consideration long-term maintenance of complex systems. With the constant improvements in technology, long-term maintenance needs to be prioritized in planning.
Public-private partnerships, on the other hand, allow for constant maintenance, collaboration and innovation with the organization over a long period of time.
Because PPPs invest so much stake and energy in providing the best solution, they assume the risks associated with modernizing systems and delivering services that are high-quality and long-lasting. Win-win.
PPPs Enable Agility in Implementation and Delivery
Continuous improvement and adopting innovations are essential for the long-term success of public-private partnerships.
Agile methodology is an approach to project management that emphasizes team-building, continuous modernization, and ongoing innovation and implementation.
When people think of public-private partnerships, rarely does the word innovation come to mind. However, when given the opportunity and permission, private companies can utilize their capital, resources, and skilled staff to design plans that will best suit a government agency’s need.
The government agency, on the other hand, will benefit from outside expertise and stakeholders who have a vested interest in making sure that government systems are modern, easy to use, and benefit the people that they serve.
Public-private partnerships are often overlooked because they require on-going support from government entities and a reliable source of funding from the private sector.
With a lot of risk and capital involved, government agencies and private contractors alike are cautious of entering into long-term contracts but when they do fully commit to collaborating on projects, they find that the risks are often worth it for the long-lasting outcomes of successful infrastructure.
RG utilizes Agile practices and provides consulting services for business analysis, project management, and systems modernization. Visit our website at www.teamrg.com to learn more.